New oil and gas setback rule is catastrophic, Greeley mayor says

JOSHUA POLSON/jpolson@greeleytribune.com
A window catches the reflection of oil drilling operations next to a home southeast of Greeley on Tuesday morning. Rules proposed by the Colorado Oil and Gas Conservation Commission would require oil and gas companies to locate future drilling operations at least 500 feet from any occupied building.

JOSHUA POLSON/jpolson@greeleytribune.com
A drilling platform sits next to the a home east of Windsor Tuesday morning. New rules tentatively approved by the Colorado Oil and Gas Conservation Commission would require oil and gas companies to future keep drilling sites at least 500 feet from any occupied building.

JOSHUA POLSON/jpolson@greeleytribune.com
A window catches the reflection of oil drilling operations next to a home southeast of Greeley on Tuesday morning. Rules proposed by the Colorado Oil and Gas Conservation Commission would require oil and gas companies to locate future drilling operations at least 500 feet from any occupied building.

JOSHUA POLSON/jpolson@greeleytribune.com
A drilling platform sits next to the a home east of Windsor Tuesday morning. New rules tentatively approved by the Colorado Oil and Gas Conservation Commission would require oil and gas companies to future keep drilling sites at least 500 feet from any occupied building.

State officials on Wednesday also announced a study that will analyze the effect of oil and gas operations on emissions.

The study will go through two phases — one from July of this year through June 2016, which will analyze how oil and gas emissions are distributed across the Front Range, and one set to begin in January 2016 that will analyze any health risks associated with emissions, according to a news release.

Gov. John Hickenlooper will request $1.3 million from the Colorado Oil and Gas Conservation Commission’s Environmental Response Fund to pay for the project, according to the release.

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New setback rules initially approved by state oil and gas regulators on Wednesday could be catastrophic for local development, Greeley and Weld County officials say.

The series of provisions, which the Colorado Oil and Gas Conservation Commission will review in two weeks for an official vote, include the requirement that all drilling sites are at least 500 feet away from any occupied building — up from an existing requirement of 150 feet in rural areas and 350 feet in urban areas, according to a news release.

“The city of Greeley cannot live with that,” Greeley Mayor Tom Norton said following the decision. “It could be catastrophic for both Greeley and Weld County.”

Norton spoke at the commission’s hearings on Tuesday, saying that a quarter of Greeley’s land would be useless for development if the setback rule was implemented. That could translate to a loss of $3.2 million each year in oil and gas related revenue, with more than 1,100 existing and permitted wells within the city’s growth boundaries, he said.

Norton said Wednesday the cost of providing public utilities such as water and sewer will double, as the city must extend those utilities past chunks of undeveloped land.

“I think it’s unfortunate that the oil and gas commission is not any smarter than to understand the big picture,” he said.

COGCC officials said the new rules will not apply to wells that have already been approved.

On the other side, environmental groups such as Conservation Colorado said they were disappointed the setbacks weren’t established at 1,000 feet from occupied buildings and 1,500 feet from highly occupied buildings such as schools and hospitals.

“The only ground these rules will break is the ground where drilling rigs show up next to Coloradans’ backyards and communities,” said Pete Maysmith, the organization’s executive director, in a statement.

Amie Mayhew, chief executive officer of the Colorado Association of Home Builders, said the setback requirement eats up land that developers could have used to build more houses, which means a higher cost — she cited $25,000 more — to develop each lot.

In some cases, it means developers could pass up smallerprojects, because it won’t be cost-effective, Mayhew said.

“So in ag, we won’t buy their land,” she said, which will likely lower their land values.

Weld County Commissioner Barbara Kirkmeyer, who also spoke at the commission hearings, said the county’s loss in property taxes due to stunted development could amount to $257.8 million over a five-year period.

In Weld County, it’s easier for farmers and ranchers to negotiate with oil and gas companies without getting government officials involved, Kirkmeyer said, because they know where a well pad won’t interfere with their business.

Nick Colglazier, director of state affairs for the Colorado Farm Bureau, said a 500-foot setback means a well pad must locate more in the center of an agricultural operation, which disrupts farming practices — especially irrigation. That leads to a loss in production and a decrease in land values, he said.

The cycle continues when banks look at farmers’ assets for collateral and see stripped land, which means they will have a more difficult time getting loans again when they have to sell their land in a crisis, Colglazier said.

Doug Flanders, spokesman for the Colorado Oil & Gas Association, said in a statement the COGCC does not recognize the complexities the setbacks create.

Horizontal drilling would ideally offset the number of wells and setbacks needed in the state, but they make up only 2 percent of the active wells in Colorado, and the underground easements oil and gas companies need in order to horizontally drill are not always guaranteed, Flanders said in the statement.

The rules also require oil and gas operators to get approval from the commission if they want to drill within 1,000 feet of highly occupied buildings such as schools or hospitals, implement a number of new practices to reduce disruptions such as odor, emissions and dust, and engage more with surrounding property owners and local governments when a new drill site is proposed, according to a news release.

On Monday, Weld and industry officials praised a rule passed by the COGCC in the same set of hearings that makes Colorado the only state in the nation that requires oil and gas operators to test groundwater before and after they drill. They said the rule is fair and should provide assurance that hydraulic fracturing does not contaminate groundwater.